Holiday Pay and Sickness Absence

Those of you who read our updates and attend our seminars will be aware that there has been a great deal of caselaw on this confusing issue.  It is clear that workers continue to accrue annual leave entitlement during sickness absence, and that they can choose to take annual leave at the same time as being absent due to sickness.  But can such an employee claim holiday pay where no notice to take the leave has been given to the employer?

The Judge in the recent EAT case of Fraser v St George’s NHS Trust said ‘no’.

In this case the employee was injured at work and was on sick leave for four years until her dismissal.  For the last few years of her employment she received no pay.  On the ending of her employment she received a payment in lieu of her entitlement for that year but she also sought holiday pay in relation to each of the two previous years.  In the light of the case of Stringer there was no doubt that the employee had accrued the right to annual leave during the years in question.  But the employer argued that if she wanted to exercise that right she had to give notice to the employer under Reg 15 (1) – which she had not.

The EAT confirmed that an employee is only entitled to holiday pay if she has actually taken the leave to which the pay relates and has done so in accordance with the Working Time Regulations by giving notice pursuant to Reg 15.

This is good news for employers who have employees on long term sickness absence for a number of years.  Although an employee may well be entitled to the leave for the untaken leave during the year in which termination takes place (as any employee would), this decision is likely to restrict their ability to claim for holiday pay for previous years unless they have specifically requested to take it, or to carry it over.  The EAT said that there was no reason why the general rule of “use it or lose it” should not apply to those on long term sick and whilst an employee may be entitled to take or defer holiday that they have not been able to take due to long term sickness, it is for the employee to ask for it.

Should you require any further information on this issue, please contact Anna Bunting, a Partner in our employment department.

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